Geopolitical Risk Is No Longer Just an Oil-Price Story: How Companies Should Read the New Cost Environment

The Russia-Ukraine war and the conflict centred on Iran and the Middle East show that energy risk can no longer be understood through oil prices alone. FX, freight, war-risk insurance, refining margins, inventory and financing costs can move at the same time. For import-dependent economies such as Türkiye, the role of finance is increasingly to identify these pressures before they reach the financial statements and translate them into pricing, margin and liquidity decisions.

For the past several years, most discussions about energy costs have started with oil and natural gas prices.

When Brent rises, we talk about cost pressure.

When it falls, we expect relief.

I no longer think that is enough to understand what companies are facing.

The energy and supply-chain pressures that emerged during the Russia-Ukraine war have become more complex in 2026 as tensions involving Iran and the Middle East, together with continued security risks around the Strait of Hormuz, have introduced another layer of uncertainty.

For companies, the question is no longer simply how much a barrel of oil costs.

It is also how oil, natural gas and other imported inputs reach the company, through which route, at what freight cost, with what insurance premium, within what lead time and at what exchange rate.

That distinction is particularly important for economies such as Türkiye, where dependence on imported energy and intermediate goods remains significant.

The World Bank's latest commodity data show that its energy price index increased by 25.7% in September alone.

Crude oil increased by 21.2% during the month and natural gas by 15.3%.

The World Bank's current outlook projects energy prices to rise by 24% in 2026.

These numbers are significant.

But I believe the more important development is that the relationship between physical supply and the effective cost of energy has become increasingly complex.

The Strait of Hormuz illustrates the point.

According to the U.S. Energy Information Administration, oil flows through Hormuz were around 21 million barrels per day in the second quarter of 2025.

By the second quarter of 2026, that figure had fallen to approximately 4.9 million barrels per day.

LNG flows also declined sharply.

By September, Gulf oil flows had recovered considerably.

The physical flow of energy can therefore recover while the effective cost of moving that energy remains elevated.

That distinction matters.

The availability of oil does not mean that oil or refined products can be delivered at their previous cost.

Shipping capacity, secure routing, war-risk insurance, tanker rates and reduced refining capacity can all create another layer of cost on top of the underlying commodity.

Reuters reported in early October that Middle East-to-Asia tanker rates had exceeded $1.2 million per day.

Even as crude flows improved, logistics bottlenecks continued to keep effective energy costs under pressure.

The Russia-Ukraine war represents another part of the same equation.

Attacks on Russian refineries and energy infrastructure influence not only production capacity but also the supply of refined products.

Security risks to commercial shipping in the Black Sea add another layer of uncertainty to commodity and transport markets.

This is why the global energy problem can no longer be understood by asking only whether supply exists.

The better question is: at what cost, and within what time, can that supply reach its destination?

Why Türkiye is particularly exposed

Türkiye's energy structure helps explain why global price and logistics shocks can move relatively quickly into corporate costs.

According to the Ministry of Energy and Natural Resources, Türkiye produced 6.68 million tonnes of crude oil in 2025 while importing 31.94 million tonnes.

Crude-oil import dependency was approximately 83%.

Natural-gas dependency is even higher.

Türkiye produced 3.11 billion cubic metres of natural gas in 2025 while importing 58.34 billion cubic metres, implying import dependency of approximately 95%.

But focusing only on energy imports still understates the exposure of Turkish businesses.

TurkStat data show that intermediate goods represented 71.1% of Türkiye's total imports during the first eight months of 2026.

This matters because an energy or logistics shock does not reach a company only through its fuel, electricity or natural-gas bill.

It can appear again through chemicals, plastics, metals, packaging, transportation, imported semi-finished goods and many other production inputs.

The timing also differs.

Fuel-price changes may affect logistics costs within days.

A raw-material price increase may not reach reported production costs for several months because the company is still consuming older inventory.

Finance therefore needs to understand not only the size of the shock, but also the time lag with which it will reach the business.

Table 1 — Türkiye's cost exposure

Indicator	Current structure	Corporate implication
Crude-oil import dependency	Approx. 83%	High sensitivity to oil and refined-product shocks
Natural-gas import dependency	Approx. 95%	High exposure for energy-intensive industries
Intermediate goods share of imports	71.1%	External shocks can spread through production inputs
D-PPI energy, annual	30.82%	Domestic energy-cost pressure remains significant
D-PPI intermediate goods, annual	28.11%	Cost pressure extends across the production chain

Watching Brent is no longer enough

The Central Bank of the Republic of Türkiye's September Monetary Policy Committee summary illustrates the issue clearly.

Energy prices increased by 5.46% month-on-month in August.

The central bank highlighted the impact of international oil prices and also noted that higher refining margins had been reflected in diesel prices.

Brent averaged around $91 per barrel in August and approximately $103 during the first ten days of September.

For a CFO, however, the relevant issue is not simply that oil has become more expensive.

A company's effective imported-input cost is shaped by multiple variables at the same time.

Table 2 — The CFO cost monitor

Indicator	What it measures	Main decision area
Brent / relevant commodity	Base input-price shock	Procurement, budgeting
USD/TRY and EUR/TRY	Local-currency import cost	Pricing, hedging
Freight	Effective delivered cost	Supplier and route selection
War-risk insurance	Geopolitical risk premium	Landed cost
Refining / supplier margin	Cost pressure beyond crude	Product cost
Inventory days	Timing of cost transmission	Working capital
Financing cost	Cash cost of higher-value inventory	Liquidity
D-PPI energy / intermediates	Domestic cost transmission	Budget and repricing

What matters is therefore not the market price alone, but the company's own exposure.

A 10% increase in Brent does not automatically translate into a 10% increase in total corporate costs.

The reverse is equally true.

A decline in Brent does not necessarily produce an immediate proportional reduction in costs.

The outcome depends on energy intensity, imported-input exposure, inventory, contracts, currencies and supplier pricing behaviour.

This is why I believe finance teams need to move somewhat beyond the traditional annual-budget model.

A budget built around one oil-price assumption, one exchange-rate assumption and one inflation forecast can become obsolete very quickly.

Companies need to identify their own cost drivers.

How much of total cost is directly or indirectly linked to energy?

What proportion of inputs is imported?

Which inputs are dollar-linked and which are euro-linked?

How long are freight contracts fixed?

How frequently can suppliers reset prices?

How many days of critical raw-material inventory does the company carry?

How quickly can a new cost level be passed through to customers?

Without these answers, following macroeconomic indicators alone does not provide an adequate risk-management framework.

The real question is pricing

One of the most important financial consequences of a cost shock is pricing.

The traditional reaction is straightforward: cost rises, therefore price rises.

In volatile markets, that is not enough.

The first task is to understand the nature of the increase.

A temporary freight shock should not be priced in the same way as a structural increase in energy costs.

A one-month currency movement is not the same as a new cost base that the company may face for the next twelve months.

Finance and commercial teams therefore need to work from the same set of numbers.

Table 3 — From cost shock to pricing decision

Question	Finance interpretation	Possible response
Is the increase temporary?	Short-duration shock	Temporary surcharge
Is it structural?	New cost base	Permanent repricing
Is the customer price-sensitive?	Volume / margin trade-off	Segment pricing
Does the contract allow adjustment?	Indexation clauses	Automatic adjustment
Has margin crossed its floor?	Contribution pressure	Product/customer repricing
Is cash under pressure?	Working-capital requirement	Price and payment-term change

Good pricing does not mean passing every cost increase directly to the customer.

Management needs to determine where margin must be protected, where volume matters more, and where accepting a temporary decline in margin may preserve a strategically important customer.

For some contracts, an energy or freight surcharge may be more appropriate than a permanent list-price increase.

For longer-term relationships, pricing mechanisms linked to specific commodities, energy indices or currencies can reduce uncertainty for both sides.

What Türkiye's price data tell us

Türkiye's September 2026 data show that cost pressure has not disappeared.

Consumer inflation stood at 29.73% year-on-year.

The Domestic Producer Price Index increased by 27.38%.

For finance teams, however, some sub-components may be more informative than the headline figure.

Intermediate-goods prices were 28.11% higher than a year earlier.

Energy prices were up 30.82% year-on-year and increased by 3.55% in September alone.

This is why measuring corporate cost inflation solely through CPI can be misleading.

A manufacturing company's actual inflation rate is determined by the intermediate goods it buys, its energy consumption, foreign-exchange exposure, logistics structure and financing cost.

In that sense, every company has its own inflation rate.

One of the finance function's responsibilities should be to measure it.

Working with three scenarios

Rather than producing dozens of forecasts, I prefer a small number of scenarios that management can actually use.

Table 4 — Geopolitical cost scenarios

Scenario	Energy and logistics	Likely corporate effect	Finance priority
Normalisation	Prices and freight decline	Margin pressure eases	Competitive repricing
Prolonged stress	Elevated but manageable	Persistent cost pressure	Selective pricing, contract review
Renewed shock	Energy, FX and freight rise together	Margin and liquidity stress	Emergency pricing, inventory and funding plan

The first scenario is normalisation.

Energy flows improve and freight and insurance premiums begin to decline, although prices do not immediately return to pre-war levels.

The second is prolonged stress.

Physical supply remains available, but security, freight and refining constraints persist.

The third is a renewed supply or logistics shock.

A major disruption returns around Hormuz, the Black Sea or another strategic route and energy, freight and FX move against the company at the same time.

The objective is not to predict precisely which scenario will occur.

The objective is to understand in advance what each scenario would do to the income statement, cash flow and working capital.

A cost shock does not affect gross margin alone.

More expensive inventory requires more working capital to finance the same production volume.

Longer lead times may encourage companies to increase safety stocks.

More inventory ties up more cash.

When interest rates are high, the financing cost of that inventory rises as well.

A geopolitical event can therefore become a liquidity problem several steps later.

Where finance creates value

This is where I believe finance creates the greatest value.

Not by reporting afterwards that costs have risen, but by defining in advance which management decision should be triggered when a particular variable reaches a particular level.

Table 5 — Management triggers

Variable	Question	Predefined decision
Oil / energy	Outside budget range?	Review procurement and pricing
FX	Outside budget currency band?	Hedge / price review
Freight	Alternative route now viable?	Supplier or route change
Inventory days	Safety stock rising?	Additional working capital
Gross margin	Below agreed floor?	Product/customer repricing
Cash conversion cycle	Cash recovery slowing?	Revise payment and collection terms

When these thresholds are defined in advance, finance moves from reporting the past to becoming part of the company's decision system.

That is my central reading of the current environment.

Geopolitical risk is no longer something that sits outside the company and belongs only on the economics pages.

It reaches pricing through energy, inventory through logistics, procurement through foreign exchange and liquidity through financing costs.

The role of finance is therefore not simply to measure the consequences after they arrive.

It is to understand how the shock will travel through the company, measure the company's own exposure and prepare pricing, procurement, inventory and liquidity decisions before the impact reaches the financial statements.

By the time geopolitical risk appears on the balance sheet, the risk itself is not new. It has simply become visible.

Sources

World Bank — Commodity Markets

https://www.worldbank.org/en/research/commodity-markets

U.S. Energy Information Administration — Global Energy Security and Strait of Hormuz

https://www.eia.gov/outlooks/steo/report/energysecurity/article.php

Republic of Türkiye Ministry of Energy and Natural Resources — Crude Oil

https://www.enerji.gov.tr/info-bankenergycrude-oil

Republic of Türkiye Ministry of Energy and Natural Resources — Natural Gas

https://enerji.gov.tr/info-bankenergynatural-gas

TurkStat — Foreign Trade Statistics, August 2026

https://veriportali.tuik.gov.tr/Bulten/Index?dil=1&p=D%C4%B1%C5%9F-Ticaret-%C4%B0statistikleri-A%C4%9Fustos-2026-58239